Budget 2024: Union Minister of Finance and Corporate Affairs, Ms. Nirmala Sitharaman, reduces fiscal deficit for FY25 to 4.9% of GDP

Union Minister of Finance and Corporate Affairs, Ms. Nirmala Sitharaman, announced a revised fiscal deficit target of 4.9% of Gross Domestic Product (GDP) for 2024-25, down from the 5.1% projected in the interim budget. The fiscal deficit represents the gap between government expenditure and receipts in a fiscal year. She detailed that total receipts for FY25 are estimated at US$ 383.34 billion (Rs. 32.07 trillion). In comparison, total expenditure is projected at US$ 576.26 billion (Rs. 48.21 trillion). Gross market borrowings are set at US$ 167.46 billion (Rs. 14.01 trillion), with net market borrowings at US$ 139.02 billion (Rs. 11.63 trillion). Net tax receipts for the year are estimated at US$ 308.75 billion (Rs. 25.83 trillion).

In her budget speech, she reaffirmed the Centre’s aim to achieve a fiscal deficit of 4.5% by 2025-26. Despite expectations that the fiscal deficit might remain unchanged at 5.1%, the Economic Survey projected a reduction to 4.5% by 2026. The survey highlighted a decrease in the fiscal deficit from 6.4% in 2022-23 to 5.6% in 2023-24, driven by strong growth in direct and indirect taxes and improved tax compliance. Additionally, higher non-tax revenue from RBI dividends contributed to the increase in revenue receipts. The survey noted that a significant portion of the fiscal deficit is now attributed to capital outlay, indicating improved productivity of borrowed resources.

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